Activision Blizzard Inc. shares closed on Friday at the highest price since 1984, or at a high level when you considered more stock divisions, following strong gains and a prospect that aims to capitalize more on the fast-growing mobile gaming market . .
Activision Blizzard ATVI,
shares rallied more than 12% on Friday and closed 9.6% at $ 101.61. This is the first time that Activision’s share price has ended above $ 100 since January 20, 1984, when the stock closed at $ 103.12, according to FactSet data. However, accounting for the nine share divisions since then, the shares ended at a record high for a record market cap of $ 78.53 billion, according to FactSet.
Late Thursday, Activision Blizzard reported quarterly results and a outlook that exceeded Wall Street expectations, along with plans to expand several mobile franchises. The company publishes the popular “Call of Duty” franchise under the Activision brand, the “World of Warcraft” franchise under the Blizzard brand, together with the “Overwatch” and “Diablo” and “Candy Crush” franchises under the King brand. Activision acquired Blizzard in 2008, merging with the gaming business Vivendi and King Digital Entertainment in 2016.
In recent years, mobile gaming has been the fastest growing platform for the video game industry, accounting for about half of the approximately $ 180 billion in 2020 sales, and PC and console-based games make up the other half, according to IDC .
Of the 34 analysts covering Activision Blizzard, 28 have share buy ratings, five have a holding rating, and one has a sell rating, according to FactSet. Of these, 20 raised their price targets, raising the average price-per-share target to $ 108.86 from a previous high of $ 92.68, according to FactSet data.
JPMorgan analyst Alexia Quadrani, who has an overweight stock rating and raised its target price to $ 115 from $ 101, expects the Call of Duty franchise to become the template for the company’s other stocks.
Not only does “Call of Duty” go the traditional way of selling consoles and PCs with its titles “Black Ops – Cold War” and “Modern Warfare”, but the franchise has a similar Royale “Warzone” combat option. to Epic Games Inc.’s “Fortnite,” with all those options available on a mobile platform.
“The success of the CoD in 2020 has significantly exceeded expectations since the beginning of the year (even adjusting for the pandemic) and we expect ATVI to apply a similar innovation to the business model of other securities, using mobile devices to expand coverage and free -to-play to drive the conversion of players to premium games “, said Quadrani.
Stifel analyst Drew Crum, who has a buy rating and a target price of $ 108 per share, remained positive about the company’s potential developments, even though he considered the results mixed.
“We believe that this (however) is being replaced by the (positive) comments of the management at” 21 (and not only), which provided a broader context in terms of the timing of key initiatives and what seems to be set for a potentially massive year in ’22, ”Crum said.
Raymond James analyst Andrew Marok, who is performing better and has raised his stock price target to $ 120 from $ 109, said he still believes the company “has a lot of track to reach new players through mobile bidding. and free-to-play and capitalize on the demand for new titles planned in existing franchises. ”
UBS analyst Eric Sheridan, who has a buy rating and raised his price target to $ 120 from $ 116, said Activision Blizzard has been keeping its theme true for the past 12 months.
The company’s earnings report demonstrates how the wider industry has benefited from the “home” dynamic, but remains focused. [long term]Sheridan said.
“In the latter, the industry is ready to become a net action of media consumption, to benefit from a blurring of lines on the platform and game preferences by a global base (increasingly mobile first) and continues to allocate capital a mix of growth and shareholders, ”the UBS analyst said.
Wells Fargo analyst Brian Fitzgerald, who has an overweight rating and a target price of $ 120, asked in a note, “How big and profitable can he get this?”
Last year, Activision Blizzard highlighted four pillars of its long-term strategic growth: more new releases, improved live operations, expanding popular PC and console games on mobile platforms, and adding “new engagement models,” such as branching. in the city league and esports player.
Fitzgerald said the management “was clearly expecting a” step change “in financial performance in fiscal year 22 and we have no reason to doubt their ability to execute the four-pillar growth strategy for franchises other than” Call of Duty ””.
Piper Sandler analyst Yung Kim, who has an overweight rating and a target price of $ 120, said the company’s forecast is conservative, as it does not include the expected launches of the “Diablo” and “Overwatch” franchises.
“Activision is looking for year-round growth for the Call of Duty franchise, despite a difficult comparison with the launch of Call of Duty Warzone on March 20, which was also spurred by the emergence of home stay regulations around resumes. -19, ”said Kim. “Despite high expectations, we continue to suspect a heavy dose of conservatism.”
Kim said she expects to hear more details from the company’s BlizzConline 2021 show, which begins Feb. 19.
Meanwhile, Cowen analyst Doug Creutz, who has a market performance rating and a target price of $ 100, has expressed some skepticism about the company’s forecasts of having two more franchises – probably “Diablo” and “Overwatch,” he says – contributing $ 1 billion in annual revenue, in addition to “Call of Duty,” “World of Warcraft” and “Candy Crush.”
“This is a pretty bold prediction, given the relative lack of such franchises on the market and Blizzard’s obvious recent struggles other than WoW,” Creutz said. “However, we expect most investors to offer management the benefit of the doubt (at least for now).”
In the last 12 months, Activision shares have gained 73%, while the IGV ETF has expanded the iShares technology-software sector,
increased by 48%, the S&P 500 SPX index,
increased by 17%, and the Nasdaq Composite Index COMP heavy technology,
won 46%.
On Tuesday, shares of Electronic Arts Inc. SHE,
retreated from a record high after the video game publisher reported quarterly results that did not exceed Wall Street expectations. Take-Two Interactive Software Inc. THREE,
is scheduled to report its results after market closes on Monday.
EA shares closed 1.9% at $ 141.22 on Friday and rose 31% in the last 12 months, while Take-Two shares closed up 3% at $ 207.49 and rose by 72% in the last 12 months.